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It has been about two years that the term business model has been heard more often in the management literature. At first, people may confuse it with a business plan. But these two concepts are different in some cases.

A business plan or a business plan, in simple terms, is documents, reports and documents that prove that the business activity is profitable and will have a suitable return on investment. These documents also include financial flow estimates, raw material requirements and personnel salaries, supply and distribution costs, etc.

But in the business model, it answers three main questions:

Questions about business value creation

Value creation practices are important not only for starting a business but also for a country’s economic future. Business should add value that did not exist before and increase welfare.

Questions about business monetization

No matter how new, different and great the business idea is, the method of converting it into money and income must be clear. No idea is worth spending time and money without making money.

Questions of how to sustain and survive the business

The concept of sustainability in management is tied to meanings such as sustainability, profitability and stability. One of the important pillars of the business model is how to continue and survive the business. Of course, no one is interested in participating in a project that has an uncertain future.

Business model components

One of the most famous definitions of the business model, which is used as a guide to guide the business path in most of the successful startups in the world, is the planetary business model. This model emphasizes on generating income and consists of nine main parts:

1. Customer segments

This segment consists of people and groups who can be potential and profitable customers. In order to complete the customer section, two main questions must be answered?

A: Who are our customers?

B: For whom can we create value?

A: Where are our customers located?

2. Suggested values

A set of services or products that meet the needs of customers in the same area and this value is the reason why customers choose an option between several businesses. It can also be seen as a competitive advantage over competitors. In this section, the answers to the questions must be clearly specified:

A: Which of our products or services is suitable for which group of people?

B: What are the needs of customers?

C: What are the competitive advantages of this business?

D: Which customer problem will be solved by the services or products of this business?

3. Communication, distribution and sales channels

This section describes how the business communicates with customers and delivers products or services to them. Since distribution channels are the point of contact with the customer, it is important.

A: Which distribution channel should be chosen for each category of customers?

B: What is the right time to communicate and reach customers?

C: From what channels can they be accessed?

4. Relationships with customers

Establishing and maintaining strong relationships with customers is one of the most important factors for the sustainability of a business. These relationships can be easily monitored and tracked continuously with data-driven methods.

A: What is the method of communicating with customers?

B: How is communication with other business departments coordinated and related?

C: What quality of communication are customers looking for?

D: For each category of customers, communication should be established on which platforms?

5. Income streams

Every business should be able to have an acceptable income stream in proportion to the costs and the value it creates for customers. The income stream is the result of receiving money while providing services or products to customers.

A: What is the share of each financial flow in the total income?

B: What are customers willing to pay for?

A: Which payment method do customers prefer?

D: To what level are the prices acceptable for customers?

6. Key sources

To produce a product or create a service, supplier and infrastructure resources are needed so that special values ​​can be available to customers. The quality of key resources will have a direct impact on the final output of products, cost and customer satisfaction.

A: What resources are needed to create income streams?

B: What resources are needed to create value propositions for the customer?

7. Key activities

Key activities are the most important actions a business needs to perform in order to perform successfully. Key activities are also necessary to create and deliver value proposition, reach markets, maintain customer relationships and generate revenue.

A: What measures are needed to create value?

B: What are the key activities in the customer relationship department?

C: Through what activities are the income streams generated?

8. Key partners

Businesses establish partnerships with individuals, individuals, or other businesses with the aim of reducing risk, obtaining resources, or other profitable reasons.

A: What key resources do partners provide?

B: What key services do partners perform?

A: What are the legal limits of this partnership?

9. Cost structure

This section estimates the most important costs for a business. Creation of value proposition, key activities, use of resources, establishing relationship with customers, distribution channel costs, etc. are included in these calculations.

A: What are the most expensive activities?

B: What are the most important costs?

C: How much does each section cost?

Conclusion:

In this article, we tried to briefly explain the difference between business plan and business model and examine the components of the business model to make this distinction clearer.

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